Saying ‘no thanks’ to Nexen deal patently unwise: Jim Prentice

Canada needs oil links to Asia as Nexen reviewed: Jim Prentice

The Canadian government should not be “concerned about the so-called ‘ethnicity of money’ ” and be open to foreign investment, particularly in the oil-and-gas sector, former cabinet minister Jim Prentice said in a speech in London, England, Wednesday.

“Canada must and will remain open for business,” Mr. Prentice, now senior executive vice-president and vice-chairman of Canadian Imperial Bank of Commerce, said, addressing an audience at the Oil & Money 2012 conference.

We can’t and shouldn’t try to force China or other countries to be like us. Closing doors to investment is no way to open minds

“Saying ‘no thanks’ to the largest new market opportunity, namely China, would be patently unwise…. We can’t and shouldn’t try to force China or other countries to be like us. Closing doors to investment is no way to open minds.”

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Investments from state-owned enterprises (SOEs) have been a source of mounting controversy and debate in Canada. “There was obvious and escalating public concerns in Canada about SOE investments and the blithe assumptions that ‘net benefits to shareholders’ necessarily equate to a ‘net benefit to Canada.’ ”

The rejection of the Petronas deal had worrying implications for CNOOC’s Nexen bid and the future of foreign investment in Canada’s resource sector. It is estimated that Canada needs more than $600-billion to develop the oil sands over the next decade, meaning foreign direct investment is necessary.

Petronas has extended the deadline for its takeover to Nov. 30 in hopes it can persuade Ottawa to let the deal go through. Meanwhile, Ottawa has said it has extended the review of the CNOOC offer for Nexen until Dec. 10.

“The essence of what took place in that situation was an attempt by the government to ensure that the Petronas decision and the CNOOC decision were made in the same time frame,” Mr. Prentice said in an interview. “The appropriate thing for the government to do has been to harmonize the decision-making on those two applications and ensure that there’s a framework to move forward in terms of foreign investment generally.”

Ottawa’s net benefit test for big foreign deals with Canadian companies has been criticized for being ill-defined. The acquisition of Canadian energy resources by foreign governments should and will raise public policy questions, Mr. Prentice said.

“As I have often made clear in my meetings with the CEOs of some of China’s largest state-owned enterprises: Free markets don’t mean a free pass,” he said. “While Canada is most definitely open for business — it is not for sale.”

In allowing state-owned enterprises to invest in Canada, the government should ensure that foreign investments adhere to strict standards of governance and transparency, he said. He suggested the Investment Canada Act be improved to increase transparency and provide greater guidance on what is expected of SOEs.

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